Compensation & Benefits Review

Significant performance improvement is possible when companies discard the traditional appraisal and invest in top-down performance planning and management.

Compensation professionals are increasingly being asked to provide empirical evidence of the effectiveness of company incentive plans. Senior management is less willing to accept plan success at face value today. However, it is necessary to conduct a systematic evaluation to connect performance improvements with plan design. The results must be significantly higher following implementation, and there must be no attribution to external sources. Within a real options framework, evaluative information is integral for making subsequent compensation resource decisions-whether or not to continue the plan or revise the mechanics. Unfortunately, the evaluation of an incentive plan may be complicated by company constraints pertaining to participation, time, and business conditions. This article describes a method for assessing incentive plan effectiveness over a brief period, which negotiates these constraints. Specifically, the “short” interrupted time series analysis is recommended as a suitable procedure for incentive plan evaluation. Postevaluative actions are also discussed.

Over the past several years, nearly 50 lawsuits have been brought under ERISA against companies that permit employees to invest their retirement plan funds in company stock and/or companies that contribute company stock as a matching contribution to the company's retirement plan. These lawsuits are frequently referred to as ERISA copycat suits because they rely in large part on the same factual allegations in the parallel securities fraud proceedings. Haynes & Boone, LLP has been conducting a comprehensive evaluation of each of the ERISA copycat suits that has been filed over the past several years. This article examines the following issues with respect to the developing phenomenon of ERISA copycat suits: the typical parties, procedural issues, the common allegations made by plaintiffs and the defenses raised in response to those allegations, and the courts' initial responses to common allegations and defenses.

When a corporate transaction occurs, many pervasive technical, economic, plan design, and human resource issues surface in compensation and benefits. This article examines the breadth and depth of those issues. In recent years, infamous corporate scandals regarding fiduciary issues coupled with significant legislative and regulatory activity have made employee benefit plan due diligence more visible and complex when viewed through the paradigm of corporate transactions. Unfortunately, very often the buyer's due diligence teams do not focus on these employee benefit plan issues, which can be costly in terms of overstated purchase price, and the difficulty in obtaining retroactive adjustments or credits. It is important for companies to review employee benefit plans at the earliest stage of a corporate transaction. Because of the complexities of employee benefit plans, the due diligence review will bring to the surface the economic and technical impact that may affect the purchase price or administrative issues going forward.

The process of effectively implementing automated benefits administration can be much more complex than it appears on the surface for a number of reasons. The world of automated benefits administration has changed dramatically over the past ten years. This article discusses the beginnings and the current state of online benefits automation. Whether automating in house or using a third-party provider, finding the right software or provider is a critical success factor for both the implementation process and ongoing service delivery. Many common issues arise whether automating the process internally or using a third-party provider. Asking the right questions is crucial to avoiding many of these issues.